How much should the state be involved in determining who are in a marriage relationship?

The recently released Child Poverty Action Group’s (CPAG) report on the Complexities of Relationship in the Welfare System and the Consequences for Children tells some ugly stories. Benefit entitlement can depend upon the relationships between adults. Sometimes beneficiaries do not report their true relationship (or what it is deemed in law may not reflect how they think about themselves). As a result they claim more benefits than the law entitles them to. If found out they may have to repay excesses (not easy if you are already below the poverty line) and even be punished by incarceration.

The relentless force of the law (and the Ministry of Social Development) pursues such outcomes oblivious to the wellbeing of any children (whose welfare is often the reason for the benefit in the first case). They may suffer even more than adults. In one case I was marginally involved with, the mother was jailed for ‘benefit fraud’ and her children put in care. That alone would normally be disruptive to their welfare but in addition one was abused by their foster parents. Released, the mother had her miserable benefit docked to repay the over-spending; her children suffered yet again.

Stepping back we may ask why did it matter that she (or many other women) was in a relationship in the form of marriage? Indeed why should the state care whether someone is married or not? (And even more unfathomable why should the state actually penalise marriage?)

Historically the state was involved in marriages because in a feudal society vassals were subject to their lords and marriage between the lords and ladies themselves often involved complicated property dealings. Additionally, the state and religious authorities were deeply intertwined.

None of these issues are relevant today. A marriage is a private relationship; it is not at all evident that the state should be concerned (any more than with the private relationships you make by joining a cricket club). Practically, the state does not go hunting for couples in defacto but not dejure relationships threatening them with a shotgun.

What about children? In the past marriage meant having children. But that is no longer true. Today the public policy issue is how to deal with children (sometimes called family policy). Given that many children may not be living with couples and many couples are not living with children, marriage does not seem to have much to do with family policy.

There may be a case for allowing for a couple to register their relationship with the state. If they want to celebrate the event with their friends and relations, why not? (To be clear, your sentimental columnist is always delighted when that happens.) Many couples choose another path. Given it is a private relationship, who cares?

It appears that ‘matrimonial’ property laws are necessary when the relationship breaks down (irrespective whether it is registered with the state or not). The justification may be – as often happens – that state involvement can reduce the transaction costs; in that sense it is not too different from company insolvency laws.

I have no idea how extensive is the involvement of the state in matrimonial affairs. But as someone who researches social welfare I am aware of its extensive role in the social security regime. (The CPAG consulted me on the report, but my input was small.) Having seen the damage it does to children, one wonders why it happens and whether there is a better way.

As an aside, there is a separate issue of arrangements where children are not involved. They seem to be a carry-over from when women worked only at home and men in the market place. That is no longer true. Once we break away from that headspace, there are solutions although they may require a fundamental rethinking of the extent to which we should shift from flat-rate to earnings-related benefits.

Where there are children, any resolution is more difficult. The widespread assumption, built into public policy, is that both parents should support their children. To simplify, very often the notion is that the father provides the financial support and the mother the home-care support (although many mothers nowadays may be providing some financial assistance, while some fathers contribute to the home-care support).

At this point public policy gets very confused. It is possible for a father to walk away from his family and cease financial support. (There may be maintenance payments but often they are not enforced.) Sometimes a man gets lumbered by the law by having to support children who are not his own (and who may not acknowledge him as a father).

Trying to think these things through – and working entirely at a technical, rather than public policy, level – I have explored the option where the state provides minimum (i.e. poverty level) support for all children. That pretty well resolves the problem of determining the relationship between adults but it is very expensive (a major attraction is that it would eliminate child poverty). Even so, the analysis left me with the uneasy feeling that current arrangements are designed to minimise the cost to the state – the cheapskate state, you might say.

So congratulations to the CPAG for bringing the problem to our attention. One urges the Ministry of Social Development to read their report carefully from the perspective of whether they might implement a better regime which is less destructive to our children and to our future.

Comments (3)

Making this arcane/ridiculous issue a non-issue (meaning anyone can choose to live with anyone, and everyone, they want to - no matter what their circumstances) was the main attraction of the Big Kahuna proposal for me - we do really need to get to the stage of having a GMI for all persons 18 years and older. With it comes resolution to all the other problems (i.e., disincentives) as well as the admin associated with other forms of benefit abatement - no more student allowances to administer either and to top it all off .. WINZ itself disappears (except perhaps for targeted assistance to under 18 year olds who are no longer dependents of an adult).

What is their not to like about it (aside from how to fund it, that is).

Good point Katherine. The Big Kahuna would solve so many problems and it was valuable and significant that Andrew Little referred to GM I in his opening speech. (The Swiss are having a referendum about this.) I am sure that Brian will have an interesting analysis on the pros and cons re the GMI.

Katherine Moody is broadly correct. A universal minimum income involves very high marginal tax rates (or leaving some people below the poverty line). A full explanation requires more space than a comment -- I will post a column setting out the problem in early 2015.

In the interim you might look at the calculator for Gareth Morgan's Great Kahuna. You can put you own target rates in it. Many will soon find themselves blowing the government deficit.

The default setting is a UMI for an adult at $11,000 a year and $0 for children. Currently the sole parent support is about $15,600 net, and many would think that inadequate.